KCB Group has seized Mombasa’s luxurious English Point Marina and placed Pearl Beach Hotels, the real estate firm that owns it, under statutory management over an estimated Sh5.2 billion debts.
Pearl Beach Hotels has been struggling to meet its obligations to the bank over the years. A source with direct knowledge of the matter at the Business Registration Services (BRS) confirmed that the lender had taken over the property on Tuesday.
English Point Marina joins the high-value properties that have fallen in the hands of lenders after their developers defaulted. They include Nairobi’s DusitD2, which is currently claimed by I&M Bank, with other creditors seeking to take ownership of the property complex.
KCB’s action to take over English Point Marina came after the bank tried several times to restructure the loan but the owners were still unable to meet the payments.
The receiver-manager is expected to sell part or all of the property with an aim of raising enough funds to settle the amounts owed to KCB. Other creditors may also get something once the bank’s claims are paid.
Lenders are still allowed to appoint receiver managers in loan contracts that existed before the commencement of the Insolvency Act of 2015, which subsequently ushered in the administration that prioritizes first salvaging a troubled firm before the sale of assets is considered.
KCB’s takeover of English Point Marina came after the developer fell out with buyers who claim they have not taken ownership of the houses they bought at a cost of Sh600 million.
High Court judge John Mativo recently allowed the Directorate of Criminal Investigations (DCI) to proceed with a probe of Pearl Beach Hotels, the developer, for alleged theft through fraudulent billing of apartment owners.
Justice Mativo in February dismissed a suit filed by Pearl Beach Hotels, seeking to stop the probe. His orders came as a group of 12 buyers pursued a civil suit against the property developer for locking them out of their apartments on account of disputed service charge bills.
In the civil suit, the buyers are challenging English Point Marina’s decision to deny them a chance to sublet their apartments. Dr. Khaminwa adds that English Point Marina has blocked buyers from renting out their apartments, contrary to the purchase agreement in which the management undertook to assist in sub-letting in exchange for 30 percent of revenue collected.
The lawyer says that English Point Marina has been deliberately disabling security keys for apartment owners in a bid to frustrate their tenants and guests into opting for the hotel instead.
English Point Marina had filed a suit against the DCI seeking to halt investigations, arguing that the grounds of the probe are similar to those of the civil suit filed by the 12 buyers.
Justice Mativo held that the civil proceedings are purely intended to stop English Point Marina from denying buyers access to their apartments, while the criminal investigations focus on the disputed service charges.
Source: Business Daily